Thursday, November 6, 2014

The Process of Giving Appreciated Stock to Charity

CHARITY (4617398390)


This article is not about when or what to donate to charity.  The rules around deductibility of stock donations are complex, and I would definitely recommend that you consult a tax advisor.  If you want to try to understand some of the rules yourself, the following guide may be helpful to you: Planning Perspectives: Giving Securities.  My post only describes my personal experience with the mechanics of the process.


The main reason I never donated stock before was simply that the process was unfamiliar.  There was no big "DONATE" button to click next to the stock holdings in my account, so I had a lot of procedural questions.  Who do I contact first: the charity or the broker?  What information do I need?  Do I need to contact a specific person about this?  What sorts of fees are involved?

This confusion about where to begin led me to procrastinate on stock donations.  (As an aside, I sometimes wonder how many personal finance bloggers actually do most of the things they suggest others should be doing.)  At any rate, I finally went ahead and did this a few weeks ago, and I want to explain the process in the hopes of getting others motivated to give in this way.

Contact Your Broker

It turns out the process was simpler than I expected.  Your brokerage firm will have a form to transfer stock.  If you can't locate it online, just call and ask for it.  The form has two main parts.  The first part is about you: name, account details, stock details, etc.  You should have no trouble filling this part out.  The second part is about the charity: account details, contact person, etc.  This is the tricky part.  Of course, you won't know these details, and you may not even be familiar with some of the terms.  Don't worry; this is where the charity comes in.

Contact Your Charity

Contact the charity and tell them that you are planning on donating appreciated stock and that you need details about the charity for the transfer.  Almost any large charity will have an information sheet about these details ready to send to you.  (If they don't have written information, I would suggest getting the appropriate person on the phone and walking through the transfer form, item by item.)

Fill Out The Form

Attempt to fill out the second half of the transfer form from your brokerage with the details from the charity.  It's possible you still won't be able to fill it out completely, as the charity may not have provided all the information you need or they may have used different terms than the brokerage.  In my case, for example, the charity did not provide a contact name and number that were required on the form.

Confirm The Form

At this point, I feel it's crucial to send the second half of the form (not the first half with your own account information!) to the charity filled out as best you can and ask them to confirm everything and to fill in any details you couldn't figure out.  If you are not a "hands on" sort of person, I suppose you could just skip the previous two steps and send the blank second half of the transfer form to the charity as soon as you get it from your broker.  Personally, I wanted to attempt to fill it out so that I had a general understanding of it.

The bottom line in this whole process: after you've decided what you're going to donate, the information all comes from the charity, but it must be in the form specified by your broker.

Submit The Form

Submit the form to your broker.  In my case, they asked that the form be faxed to them.  (I didn't realize people still use fax machines!)  Let the charity know they should be expecting the transfer.  Also let them know if you want the funds designated for some particular purpose.

Monitor The Transfer

The actual transfer took place the next business day.  The charity sent me a confirmation e-mail as I had requested.  The brokerage also sent me a confirmation, but it did not contain price details like a normal buy/sell confirmation.  However, the transfer price information was later provided on my monthly statement.  I personally encountered no fees of any sort to perform the transfer.

That was it.  Pretty simple!  Now that I understand the process, I intend to donate stock in any future years where that would make sense with my holdings and my tax situation.